Ordinarily, If the Fed Chooses an Interest Rate as an Intermediate

question 3

Multiple Choice

Ordinarily, if the Fed chooses an interest rate as an intermediate target,

• A)it is worried about inflation.
• B)it is worried about unemployment.
• C)it will choose a monetary aggregate as an operating target.
• D)it will choose an interest rate as an operating target.

---

Definitions:

Fixed Costs

Business expenses that are not affected by the level of goods or services produced by the business, such as rent, salaries, and insurance.

Price-Taking

A market condition where individual buyers or sellers have no influence over the price of a product due to its abundance in the market and the presence of many competitors.

Bushel

A unit of volume that is used primarily in agriculture, equivalent to about 35.24 liters in the U.S. for dry goods.

Break-Even Price

The market price at which a firm earns zero profits.